Bovine Company, a wholesale distributor of DVDs, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below:
Sales . . . . . . . . . . . . . . . . . . $1,500,000
Variable expenses . . . . . . . . . . 588,000
Contribution margin . . . . . . . . 912,000
Fixed expenses . . . . . . . . . . . . 945,000
Net operating loss . . . . . . . .. $ (33,000)
In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following data:

Required:
1. Prepare a contribution format income statement segmented by geographic market, as desired by the president.
2. The company€™s sales manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising were increased by $25,000. Would you recommend the increased advertising? Show computations to support youranswer.

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Geog aphic Market South Central $400,000 $600,000 $500,000 30% North Sales Variable expenses as a percentage .*- 40% of sales Traceable fixed expenses 52% $240,000 $330,000 $200,000